Friday, April 17, 2009

TOP STORY >> Project funds not done deal

Construction of the Lonoke-White water project this year using economic-stimulus money is far from a done deal.

To be financially feasible, all the players, especially the larger ones, must be willing to participate at a high enough level to repay construction loans.

Cabot, the biggest player in Lonoke County, doesn’t need the water except as a backup. Bill Cypert, secretary of the Cabot Water and Wastewater Commission, said this week his commission will not be rushed into a commitment simply to get the stimulus money.

Cypert pointed out that the Arkansas Natural Resources Commission, which will pull together the funding, cannot say with any certainty that grant money is available to pay for as much as half the cost of the 24-inch waterline. Neither is there confirmation from the ANRC that the interest on borrowed money will be the rumored 1 percent.

Two of the three members who make up the White County part of the proposed project also are having second thoughts.

Beebe and Southwest White County Water Association are looking to Searcy as a possible long- term supplier of surface water.

Representatives from both Beebe and SOWCO said Wednesday before a meeting of the board of the Lonoke White Public Water Authority that participation in the estimated $65 million project might cost more than they are willing to pay. SOWCO already buys from Searcy which takes water from the Little Red River. Together, SOWCO and Beebe could build a pipeline that would supply both of their water districts, they said.

Dave Fenter, with the ANRC, told LWPWA members that he needs signed contracts for financing the project with the stimulus money by Feb. 17, 2010 or his agency loses the money.

But questioned by members of the LWPWA board, Fenter said in the worst-case scenario, the project could be funded later without stimulus money at 3.25 percent interest for a 20-year loan and 3.5 percent interest for a 30-year loan.

So even if the project doesn’t benefit from stimulus money which could mean a lower interest rate, losing the stimulus money would not necessarily kill the project.

Fenter said the ANRC was interested in funding the Lonoke-White project with stimulus money because it was bid for construction in 2004, which indicated that it should be ready for construction now. Only projects that are “shovel ready” can be started in the strict timeline the ANRC must follow.

When the project was bid five years ago, Community Water Systems, located on the lake, was in charge of the project. By the time the project was bid, it was already clear that the water would cost the project members more than they were first told it would cost.

Cabot, which was to be the biggest part of the customer base, had pulled out in favor of buying water from Central Arkansas Water.

But not only would the water cost more, it was to be delivered using part of the system CWS built for its customers in Faulkner and Cleburne counties.

Since the contract that Lonoke-White members signed said they would have their own system, members of Grand Prairie Water Association and Bayou Two Water Association sued and control of the project was eventually taken from CWS and given to members of the Lonoke White project ,which met for the first time as the Lonoke White Public Water Authority in July 2005.

New members, including Jacksonville and North Pulaski Water Association, joined the project and Beebe and Cabot came back.

In all, a dozen municipal and rural water suppliers in Lonoke, White, Pulaski and Faulkner counties could get water from Greers Ferry Lake, about twice as many as when the project started.

Although the plans for running a 24-inch pipeline from an intake site on Cove Creek is completed. Not all the easements have been purchased. There is some talk of making the line larger. And the smaller lines that will branch off the main line and feed into the members’ systems have not been engineered.

But Tommy Bond, the Jacksonville engineer who has worked on the project since it came under control of the LWPWA, said there is nothing that needs to be done that can’t done by August, the deadline that Fenter has set if he is to meet his Feb. 17 deadline.

Fenter told the LWPWA members that he didn’t know how much the interest would be for the stimulus money.

It would be lower than the 3.25 percent for a regular 20-year loan, but he said he didn’t know how much lower. Grants were tied to income, he said, so he didn’t know whether the project was eligible.

The cost of the ductile iron pipe that will likely be used in the project is down, but since the interest rates and the availability of grants are unknowns, Fenter said he couldn’t tell members how much they would need to charge themselves for water to be able to pay their debt.

He said he understood that the individual members of the LWPWA must look out for the interests of the customers they represent and he understood that no one wanted to buy “a pig in a poke.” However, he said he might know more in a month and he urged the members to keep working toward getting the project started.

“I need you to keep moving and eventually I’ll have answers,” he said.